Yahoo Finance How To Budget for the Holidays When You Live Only on Social Security
Starting next year, the average Social Security check will be $1,907 a month — slightly higher than it is now, the Social Security Administration estimates. While this might be enough to afford the everyday cost of living, especially if you don’t have any debt and your home is paid off, budgeting for the holidays can be tricky on such a limited income.
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The good news is that there are many ways to work holiday spending into your budget when Social Security is your only income. All it takes is some financial planning, discipline and a bit of creativity.
Get Creative
“During the holidays, having a limited budget just means you get the opportunity to be more creative,” said Jessica C. McDonald, CFP and founding advisor of Southern Wealth Builders.
In particular, prioritize affordable gifts that are still special, fun or otherwise appealing to your loved ones.
“A few budget-friendly gifts are baked goods or even making something that you’re famous for with your friends and family, such as your homemade chili or spaghetti sauce,” McDonald said. “That can be jarred nicely, with a pretty ribbon and a new kitchen towel, and you have a cost-effective yet thoughtful gift for a loved one.”
McDonald suggested making other kits, like at-home spa kits, for friends and family members. You can even get many of these items from discount retailers like Dollar Tree or Five Below.
“What is most important when shopping is to make a list and have a plan,” McDonald said. “Stores are set up to pull on impulses of the shopper, so going in knowing that you are only getting what you need on your list will be the key to a successful Christmas shopping season.”
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Go Full DIY
If you’ve got a creative touch, you can cut costs and budget for the holidays with some do-it-yourself projects.
Brittany Pederson, director of deposit and payment pperations at Georgia’s Own Credit Union, said, “Make gifts yourself. If you have a DIY talent, turn that into a gift for someone special. Blankets, candles, woodworking and other hidden talents make thoughtful presents and are often treasured even more than an expensive item from a store.”
Create a Separate Holiday Budget
Another smart way to tackle the holiday season is to create a separate budget for that very purpose. This budget can include things such as gifts, decor and food.
“Between gift giving, holiday feasts, travel expenses and decorations, many of us tend to overspend,” said Maya Sudhakaran, head of growth and acquisition at investment app Plynk. “It’s no wonder people might feel more dread than enthusiasm about the holiday season.”
But with a budget, you can reduce costs and stress alike.
“Develop a budget specifically for the holiday season,” Sudhakaran said. “Determine how much you can afford to spend this year, make a list of everyone you plan to give gifts to and specify the intended gifts (with respective costs). Seeing a full list with a cost breakdown can minimize the risk of overspending and help ensure that you allocate funds thoughtfully to each person on your list.”
Yuval Shuminer, founder of budgeting app Piere, added, “It’s essential to have a complete picture of not just spending but of each category of spending. This enables anyone to be more proactive and intentional with holiday budgeting.”
Being aware of your holiday expenses can help you prepare for the upcoming holiday season as well as for any future ones. It also can make it easier to afford any related spending, even if you have only a Social Security check.
Take Advantage of Savings Opportunities
Depending on when and where you shop, you might find specific deals or discounts that can help you save even more money.
“Shop around and look for sales,” Pederson said. “This time of year, many retailers are offering deals and discounts. Do your research before you make a purchase and be sure you are getting the best price.”
You also can use cash back or other rewards to save money.
“Shop online whenever possible to take advantage of additional savings through cash-back websites,” suggested Samantha Landau, consumer expert at TopCashBack. “If you’re not using a cash-back website, you’re essentially leaving free money on the table.”
If you’ve got a rewards credit card, you might be able to stack your savings. Just be aware of any fees or restrictions on your card.
“On a tight budget, it is essential to find savings on all of your purchases to ensure you remain financially stable,” Landau said. “Review the terms of your credit card’s programs to determine which categories of spending offer the most cash back, rewards points and/or miles — and make note to use that card when purchasing those items.”
Shop and Cook Smart
Whether you prefer cooking at home or going out to eat around the holidays, there are several tricks you can use to make your money go further.
Dr. Kate Mielitz, an accredited financial counselor and AFC program manager for Beyond Finance, had several suggestions here.
“Baked potatoes can make cooking for fewer people much more affordable — and since not everybody loves leftovers, these should decrease what’s left as well,” Mielitz said. “Vary your dessert selections. Pie isn’t loved by all, so do you have a great brownie recipe? Even a box of Duncan Hines along with the eggs and oil can be cheaper than a pie this holiday season.”
Cook and serve alternative foods that are less expensive but still delicious — your family or guests will be happy.
As for going out to eat, there are also ways to cut costs.
“When you’re dining out, drink water instead of soda,” Mielitz said. “When you go to a restaurant, choose your entrees ahead of time so that you don’t get tempted by a more expensive meal. Almost all menus are online, which makes selecting meals early more convenient. … If you’re going to a restaurant that you know serves large portions, split one with a friend.”
Go to Cheap or Free Events
Most mid- and large-sized cities offer free or low-cost holiday events for the whole family to enjoy. This can be a great way to celebrate the holidays without overspending.
“Even smaller cities nowadays have tree lighting ceremonies, free concerts or holiday shows,” said Scott Lieberman, the founder of Touchdown Money. “And don’t forget about neighborhoods that go all out decorating for the holidays. While it may be a short drive, once you’re there, you can park, walk around and maybe even get a cheap cup of hot cocoa to stay warm.”
Avoid Tapping Into Your Savings
It might feel like the only way to budget for the holidays is to tap into your savings, especially if you live only on a Social Security check. But unless it’s a holiday-related emergency, try to avoid using your savings or investments.
“One of the biggest and most concerning trends we are seeing is that many Americans are planning to tap into savings or exceed budgets to finance holiday purchases,” said Alia Dudum, money expert at LendingClub. “This will make them especially vulnerable to any unexpected or emergency expenses come 2024. It’s important that consumers leave padding for themselves in case of an emergency in the new year.”
Instead, set aside a small amount of money throughout the year. Then, when the holidays come around, you’ll already have money for them.
Buy Only What You Can Afford
Avoid relying on credit cards or buy now, pay later (BNPL) plans during the holiday season. The interest and other fees you’ll inevitably incur can really cut into your future budget.
“As a good rule of thumb,” Dudum said, “if you cannot afford the item in full, you should not rely on being able to afford it in the near future.”
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